Forex dealers said, however, sluggish local equities capped the rupee's rise to some extent.
The local unit commenced the day marginally lower at 53.25 against the dollar from yesterday's close of 53.22 at the Interbank Foreign Exchange (Forex) market.
It moved in a range of 53.16-53.40 before settling at 53.19, a marginal gain of three paise, or 0.06 per cent. In the past four days, the rupee has spurted by 72 paise, or 1.34 per cent.
"Rupee was seen trading in a very thin range of 24 paise. The continuous appreciation in rupee is on the back of gradual fall in dollar index which made a low of 78.95 levels today. The sharp rise in euro on strong economic data from euro-zone has also supported the strength of rupee," said Abhishek Geonka, Founder and CEO, India Forex Advisors.
During the Indian Forex market hours, the euro rose above 1.36 against the dollar for the first time in more than a year.
According to Sebi data, foreign institutional investors have pumped in over USD 4.5 billion (Rs 23,935.30 crore) into local equities in January, helping the rupee gain over three per cent in the first month of 2013.
The dollar index, consisting of six major global rivals, was down by 0.21 per cent ahead to a busy schedule of US and European economic indicators.
Meanwhile, the BSE benchmark Sensex today closed down by 113.79 points at 19781.19. (MORE)
